Recession/Depression's affect on Student Loans?

<p>I remember hearing in the news a few weeks back about Banks giving less Student loans, or having problems because of this horrible Economy, I have not heard anything else, Does anyone know what the Effects will be - is it happening this year already? Or most likely next year the shortage? ANy recent news articles, please give links . Thank you.</p>

<p>I have heard this is more of an issue with private loans
Perkins, Stafford, and Parent Plus loans should be ok</p>

<p>Expert:</a> Credit Crunch Could Hit Alternative Student Loans - Education News Story - WMUR Manchester</p>

<p>Trouble</a> Ahead for Student Loans?|ABC News 4</p>

<p>This is a link from our local TV station, and a link I just found, and then below is a section from a story that was in the Manchester Union Leader yesterday. Yup, I think it's going to be a problem</p>

<p>"Meanwhile, New Hampshire Higher Education Assistance Foundation has suspended its alternative student loan program that served 4,769 New Hampshire residents last year.</p>

<p>NHHEAF President Rene A Drouin said he hopes the $200 billion that the Federal Reserve plans to lend to banks will free up credit for student loans.</p>

<p>"The hope that we have is that basically taking the pressure off the banks on the subprime mortgages would free up some of the banks' balance sheets to take on the student loan-backed securities again.</p>

<p>Last month, NHHEAF auction-rate bonds failed to sell because of concerns about its bond insurer leading to the cut off. If NHHEAF can get a bank to stand behind the student loan-backed bonds with a letter of credit, the bonds should find a market again. </p>

<p>The Federal Reserve said Tuesday it will lend banks money for up to 28 days backed by federal agency debt, federal agency residential-mortgage-backed securities (MBS), and non-agency AAA/Aaa-rated private-label residential MBS."</p>

<p>According to the President there is no recession, therefore no problem. The stiumlus package will solve all. Meanwhile don't believe it, and prepare the best you can. Keep in mind that school attendance often is counter to recession. That is recession leads to more people going to or back to school while jobs are not there.</p>

<p>Basically what I've been reading is similar to the auction scenario in the clip I posted. Private lenders aren't able to get cash to lend because investors aren't buying, due to fear from the subprime mortgage issues. </p>

<p>So you can't access private loans, you can't refinance your house to get cash out of the equity (if you even have any equity at this point), etc. People are going to get squeezed, and I think it may be a huge issue for those who don't have substantial assets. </p>

<p>As for what the president says.... does 'mission accomplished' ring any bells.</p>